COMMENTARY:As anticipated last Friday, mortgage investors snubbed various government economic reports released earlier in the week in anticipation of today’s non-farm payroll report for January.  Most market participants were expecting a growth number of about 200,000 new jobs in line with ADP’s unofficial report on Wednesday but were fairly surprised at today’s modest number of 151,000.  One would normally expect a mini rally in the bond market with rates angling downward but mortgage investors have so far taken a  cautious view.  On one hand, many economists are pointing to a national jobless rate that slipped to 4.9% from December’s 5.0% level and the 0.5% surge in average hourly earnings as a sure-fire sign labor sector growth is accelerating. Other

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COMMENTARY: Since the Fed announced their decision to increase the discount rate (and thus Prime rate) by 25 basis on December 16th -- the Dow Jones Industrial Average has fallen by more than 1,400 points and oil prices have tumbled 16%.  Confirming this trend, the Commerce Department reported today the pace of economic growth in the last three-months of 2015 slowed to 0.7% from 2.0% in the 3rd quarter of last year.  Softer consumer spending, falling exports and a smaller inventory build were the primary culprits behind the weakness. Market participants fully anticipated this plunge and lower mortgage rates were already in place before the GDP numbers were announced.  Makes you wonder why the Federal Reserve increase the discount rate to begin with…

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COMMENTARY: Earlier in the week, investors around the world breathed a brief sigh-of-relief as China announced their economy grew at a 6.9% annual pace in 2015.  Unfortunately, Wednesday’s heavy selling in US stock markets continued led by the slump in commodities like oil and the unexpected decline in new home construction.  Since last November, stock investors have been moving vast amounts of capital into the credit markets on a temporary basis – rather than as part of an intentional long-term investment strategy.  This “flight-to-quality” buying spree, which has been the primary reason for our low mortgage rates, is composed almost entirely of “hot” money.  When the “flight-to-quality” process reverses – and it will happen – look for rates to take a

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COMMENTARY: Last week, we saw a “flight-to-quality” buying spree as investors moved large amounts of capital from riskier assets like stocks into the relative “safe-harbor” of Treasury debt obligations and agency eligible mortgage-backed securities in response to weaknesses in the Chinese economy.  Investors have stayed patient as they pondered the effect on US shores.  Today they got their answer with this morning’s round of puny economic news.  December Retail Sales fell 0.1% finishing off the slowest year for U.S. retailers since 2009 -- with much of the weakness created by plunging gasoline prices. Prices paid at the gates of the nation’s farms and factories fell 0.2% in December to mark its fourth decline in five months.  

Although welcome to

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COMMENTARY: Two conflicting events buffeted mortgage rates this week and in the end, we are a bit lower than where we started.  To begin the week, heavy selling in the U.S. stock markets was spawned in large-part by a rout in China's stock markets created by reports of a significant slump in the manufacturing and construction sectors there.  On Tuesday, the Chinese government intervened in a big way to prop up the country's stock and currency markets but heavy selling struck again Wednesday and this time around intervention by the Chinese government did not significantly materialize.  Many observers think the Chinese government is coming to the conclusion their stock market is over-valued and needs to be allowed to seek its own level.  

If investors

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COMMENTARY: In preparation for the Fed’s momentous announcement this past Wednesday, market participants paced the halls of Wall Street on Monday and Tuesday with nothing better to do than micromanage every other part of the market and came up with signs of a brewing meltdown in high-yield funds (corporate junk bonds).  Many investors fear the swoon in the high-yield credit market is on the verge of cascading into something much bigger and even though mortgage-backed securities are a very distant “cousin” of the high yield corporate debt instruments – troubles in one part of the family tree tend to tarnish the public image of all members of the family to one degree or the other. This is what caused the sell-off on Monday and the mortgage market took it on

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COMMENTARY: Next Wednesday may very well be the longest-awaited and most highly touted shift in monetary policy in our history.  An overwhelming chorus of market participants are certain the Fed will for the first time since 2006 increase the Federal Discount Rate by a ¼ point.  Is it any wonder that mortgage rates showed little change this week?  The cheapest gasoline prices since early 2009 helped nudge November retail sales a very modest 0.2% higher and mortgage investors yawned.  In a separate report, the Labor Department said headline inflation rose 0.3% -- slightly stronger than expected – and its largest month-over-month increase since June and they yawned again.  Today’s 200+ point slump in the Dow Jones shows that market participants of every

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COMMENTARY: This week started out with all eyes focused on today’s Job’s Report and it did not disappoint.  The Labor Department announced that November non-farm payrolls grew by 211,000, the national jobless rate remained unchanged and average hourly earnings improved by 0.2%.  Most analysts believe today's solid jobs report has removed the last hurdle standing between the Fed's expected December 16th 25 basis-point short-term benchmark rate hike.  But does this really mean the end of low rates?

Mortgage investors live in the future -- not the present and that’s why mortgage rates have not changed from last week.  Most investors have been predicting the rate increase since October and now feel it is a virtual certainty later this month with nothing

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>> Market Update 

QUOTE OF THE WEEK... "If you don't read the newspaper, you're uninformed. If you read the newspaper, you're misinformed." --Mark Twain, American author and humorist

INFO THAT HITS US WHERE WE LIVE ... Some reporters tried to make October's 3.4% drop in Existing Home Sales into evidence that the housing recovery has firmly changed direction. Perhaps it is they who were uninformed. October may have been down, but the 5.36 million unit annual rate puts Existing Homes Sales up 3.9% over a year ago. Housing data can be volatile from month to month and many observers expect sales growth to return next month. A supply shortage was part of the problem, as total inventory was down 2.3% at the end of October. But the median price was up 5.8%

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>> Market Update 

QUOTE OF THE WEEK... "If you don't mind, it doesn't matter." --Jack Benny, American comedian, actor, and violinist

INFO THAT HITS US WHERE WE LIVE ... If you don't mind the volatile monthly headline numbers, the occasional disappointing monthly housing report doesn't matter. Housing Starts came in last week down 11.0% in October, settling at a soft 1.060 million annual rate. Overall, starts are off 1.8% from a year ago. But hold on. Most of the monthly decline was due to the drop in multi-family starts, which are highlyvolatile, month to month. Single family starts were down only a smidge, and they're still UP 2.4% in the past year. The total number of single-family homes under construction (started but not finished) went up 14% the

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